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About using Microsoft Dynamics NAV in construction business

Tag Archives: Quantity Surveyor

You can find information about main strength of NAVConstruction solution, I’ve already wrote here. Also, if you want to use standard NAV in construction business, you can find information about these implementation possibilities here. You can find more texts about reason for using ERP in construction business in my earlier blog posts.

Some construction workers want separate (specific) solutions for construction and rest processes (ERP). But, in my experience, the main strength of construction in ERP is exactly possibility of using all actual data on each part of ERP. When you use this solution, you can use:

actual cost from purchase or manufacturing in construction or when you make bids

actual cost from cost accounting, about goods and/or all other resources

automatic posting of invoice to G/L with any number of dimensions

managing with purchase process using construction requirements

using forecasting and other planning processes for construction, mechanization, subcontractors, manufacturing, purchase, sale, WMS in the same time

…

Otherwise, Microsoft Dynamics NAV is not real project planning software and someone says that this is weakness of this solution. But NAV4Construction is fully integrated with Microsoft Project Server using web-services. Now, you can use the best things of both solutions; e.g. you can use planning process in Project and Normative and Material requirement process from NAV. Maybe, bidding process is more complex in NAV, but this process is more precise.

On next picture, you can find a short SWOT analyses. If you have additional answers or comments, you can ask and start with discussion.

When we have some construction position we cannot do it, we need to find subcontractor. When we engage subcontractors, we usually have a less margin. Because of that, we need to find the subcontractor with the best condition for each position. Bid evaluation in NAV4Construction is based only on the lowest cost recommendation, but we have many other information in decision process (e.g. discounts, payment methods, due date, warranty period…).

Requirement for subcontractors we fill in Requisition Worksheet, with other requirements, as items. When we fill required positions, we need to fill Quote Query No. for all positions we want to purchase from one vendor (on one quote).

From Requisition Worksheet, we can print Quote Requirement document or export requirement in Excel file.

When we get offers from potential vendors, we need to put them in Purchase Quote in NAV. We can do it manually or automatic using import from filled Excel files. We must to fill Quote Query No. on Purchase Quote Header. This is mandatory data if we want to use bid evaluation process.

We can do bid evaluation process for complete quotes, or for each construction position individually.

Individual

We need to fill Quote Query No., type as Position and Position No. We can use Best quote windows for bid evaluation, not only for position; we can use it for item, resource… Because of that, we need to choose Type option as Position. System will make ranking based on Direct Unit Cost, with many other information.

When we choose position for ordering, we need to run Apply and system will update Requisition Worksheet with data from this quote. After that, on Requisition Worksheet, we need to run Accept the action and we will get Purchase order with choosing positions.

Complete

If we want to make bid evaluation for complete offers, process is similar as individual process. We need to fill Quote Query No. and Row number. Row number is mandatory, because we cannot compare Quotes with different number of lines.

System will make ranking based on Amount including discount (sum of Direct Unit Cost with discount), with many other information. Acceptation process is the same as in the previous example.

In my previous six posts I described posting of own work on projects, using different models. The base characteristics of this models is that we have our own resources and items consumption. Now, we have once more model for posting, when we use Subcontractors work. Target is the same, we need to make some contracted Construction Positions, but now we do not use own consumption.

We have two types of subcontractor’s engagement in our construction projects:

First, we can engage subcontractor fordo some minor work on our positions. That means, we will work some part of job, and some part of job will made by subcontractors.

Second, we can engage subcontractors for doing complete job by position. This is very often when we work on complex construction with very vary business processes, as construction of houses, buildings, etc., because the main constructor often perform only one or two types of works and engage subcontractors for all other works.

I describe how we can planning that in Construction Position Norms in my old post about Construction Position and Norms – Cost Analyze and Bill of Quantities – (Subcontractors), but now I will describe posting of subcontractor usage.

Subcontractor’s minor engagement

This is the simply process. We get invoice from subcontractors for their part of work. For posting, we will use the standard NAV purchase documents, Purchase Order or Purchase Invoice. We will post this as our cost using G/L Account, but we must to set Job No. and Job Task No. in Purchase Lines. When we post document, we will get Job Ledger Entries with G/L Account types. Our own part of job, we will post using Job and Position Journals or using Output Orders. We will invoice position we posting using Position Journals or Output Orders, with the same quantity.

We can use this model for all planned or unplanned costs on project. NAV will be classifies our own usage as resource cost or as item cost, and all other costs as G/L Costs.

As I said, this is very simply process. Other posting method need more customization or more manual work. We choose customizations, and we make automatic model of subcontractors posting in our solution NAV4Construction.

Subcontractor’s complete position engagement

In this example, we engage subcontractors for doing complete job by position. We get invoices/certificates from them for complete position engagement as we have this job in our Bill Of Quantities.

Doesn’t meter I said is too complex process, we mad it simply. For posting, we will also use the standard NAV purchase documents, Purchase Order or Purchase Invoice, but with some customizations. We will post this using Position types (new NAV4Construction type), and we also must to set Job No. and Job Task No. in Purchase Lines.

When we post this document, we will get Job Ledger Entries with G/L Account types (G/L Account from Posting Groups) as cost, and also Position Ledger Entry with output quantity and price from BoQ, and posting type Subcontractor, as well. With only one posting, we will get complete posting process, and we can prepare our invoice to customer.

The Benefits

It came as no surprise that ranked in the top five project management software benefits were access to detailed project documents, better collaboration, and faster document approvals. In my opinion, the next generation of project management software will not only provide document storage in a centralized location, it will foster better communication between project team members, resulting in more efficient and profitable projects. In fact, survey participants indicated that specialized software for construction had the best record of helping contractors come in under budget on their projects.

The Results

I know I’ve talked a lot about the potential benefits of construction specific project management software, but you may be wondering, “What about the real results?”Well, according to the survey, participants indicated that by using project management software they saw improved accountability from document control, better financial visibility, and improved collaboration. Considering the fact that these three issues are the ones that come up most often when I speak to project managers about their challenges, I feel pretty good about the role software plays in addressing them.

This article is borrowed from Dexter+Chaney blog, because I think it is a great story and it is related with my topics:

– – –

I’m pleased to introduce Byron Largen, CPA from Mountjoy Chilton Medley LLP (MCM), as this week’s guest blogger. MCM is a CPA firm with a team of accountants dedicated to construction accounting.

Construction markets remain competitive, so it comes as no surprise that construction companies have to be at the top of their game throughout a project. One of the biggest stumbling blocks, though, is often at the beginning of a project – during bidding – but there are key areas to avoid in order to make sure your teams stay on track.

1. Overlooking Your Indirect Costs

With advanced construction software to help you, identifying your direct costs on a job is probably pretty easy. But one area that leads to problems is forgetting the indirect costs — those not directly attributable to the project at hand but still likely to be in play.

For example, if you completely own a piece of equipment, you probably estimate the amount of fuel that it uses on a job, but may not consider including the depreciation, insurance, maintenance, and other costs associated with running it. All of these expenses are important to include for your bid to be accurate.

2. Missing the Mark on Profitability

With an ongoing shortage of construction jobs, it can be tempting to bid at every one that comes along, whether or not they’ll actually earn you a profit. That said, calculating profit margin can be tricky, so be sure you don’t undercut your own profitability as the number start flying. Use historic job performance as a predictor, be sure you have the latest labor rates and material prices, and if the math doesn’t add up to profitable work, be prepared to walk away.

3. Not Keeping Up with Technology and Construction Software

Used correctly, technology can give you a competitive edge For example, bids generally begin with estimates. And how can you improve your estimates? By upgrading your technology.

With the multi-dimensional capabilities of BIM now integrated into many software applications, estimators can see all angles of their work in vastly more detail than before. For instance, an estimator can separate construction components from the overall structure to scrutinize them individually.

4. Ignoring the “Other Guys”

Don’t make the mistake of underestimating your competition. When working on a bid, you’re assessing the project with respect to your company’s capabilities, but if you consider the competition, it may change the way you bid, or even your decision to bid. If two of your main competitors are known for bidding low, you may have to reduce your bid comparatively. Is the job still worth it?

Science Meets Art

Some contractors might say that bidding is a science — you crunch the numbers and stick to them. Others might say that it’s an art — when your gut says a project will be profitable and elevate your visibility in the marketplace, go for it.

The truth probably lies somewhere in between. Now more than ever, you’ve got to do the math and make sure your cash flow can handle the burden of every job. But, at the same time, no one knows your local market and construction company like you do. So your gut certainly deserves a say.

I get few questions about work in Bill of Quantities from my friends, and I will try to give answers.

Questions:

1) When we have too much construction positions (I speak about thousands), how we can import the fast. This is usually case in building construction.

2) When our customers/investors require from us quote in special file, how we can prepare that. We would not refuse big job because of that.

Answers:

1) We have two solutions. If we already have this positions in our construction positions code-list, we can use command ‘Import from Excel’; we need prepare file with codes and quantities and NAV will import them. If we have not these positions (usually we have not them), we have specific function we call ‘Massive positions import’. This function import all positions from Excel; if we have this position in our code-list it is fine, but if we have not, NAV will create them in Construction Position code-list and add them Unit of Measure. Depends of description length, system will fill only description fields or will create extended text. Also, system will create Cross-reference code for this specific project and if we want create Normative Headers. Except creating in Cons.Position code-list, NAV will fill all BoQ lines.

2) All users or partners can modify or make new Quote report. But, if this is not enough, because come customers can require that you must fill their Excel files, we have command ‘Export to Excel’. This is not perfect solution and system is not magical L, but it can help to reduce time to prepare document. We can export all important data to Excel file. You need to repack in required document design.

I am not explain all BoQ functionalities in my posts, but this is enough to understand way of working. If you have some other questions, I expect them and I will try to give you an answer.

As I wrote in my old posts, we can add subcontractor works in planned construction position normatives. We can plan in one normative, part of job works by ourself and part of job works by some subcontractor. When we prepare normative, we usually don’t know which subcontractor will work for us. Because of that, we make plan that job will work some subcontractor.

When we make Bill of Quantities, for all construction position lines where planed subcontractor in their normative is, NAV will be marked field ‘Subcontractor’. For this lines, we can fill ‘Quote Inquiry’ for potential subcontractors.

For all this lines, we can start command to print documents for their tender competition. This command is ‘Query for Quote’ and it can print document or prepare Excel file to send to potential subcontractors. We can choose to print expected price or not (only lines).

NAV will create as many request files (or documents) as we set different Quote Inquiries in Bill of Quantities lines.

When we get all quotes, we need to insert in NAV. If we get Excel quotes, we can use automatic function for import. After that, we can use functionalities for choosing the best quote, individual for each position, or as complete quote. More about choosing the best quote of Subcontractors, I will explain in some other posts.